Leasing vs Financing

The time has arrived

After countless daydreams where you've envisioned yourself perched behind the wheel of your dream car, you're finally ready to make the move. 

Venturing into the world of vehicle ownership can be confusing, especially with all of the options you have in front of you. You'll have to make tough decisions such as small or sports, compact or convertible, and, most importantly: buy or lease?

Both buying and leasing have their own set of positives - it's just a matter of what fits into your lifestyle best. 

Leasing

Car leases usually last from about three to five years, within which you would make a monthly payment toward the value of the car you're driving.

An important detail to factor into your decision to lease is what the residual value of the car you are leasing is. This is the amount that you will be paying back.

For example, you are going to lease a car that's worth $30,000, and over your four-year lease, it depreciated in value by 50%. This means your payments would reflect $15,000 divided over the four years instead of $30,000.

While leasing a car, there are often maximum kilometers that you can drive during the span of each year. Be sure to ask what your yearly kilometers would be on your lease as this will prevent extra charges at the end of your contract.

The commitment to a lease is less than that of buying a car outright. You won't have to worry about car maintenance and upkeep as much, since a warranty is usually included throughout the time of your lease.

Also, at the end of your leasing term, you will be able to trade your current car for a newer model instead of having to stress about selling the car.

Buying

When buying a car, you will have to pay for it upfront. This means that you may have to take out a loan either through the dealership or a bank.

These loans usually have interest in them, and can vary in length of time you have to pay them back - so you have some options to make it work for you.

There is a light at the end of the tunnel when it comes to buying a vehicle. Your payments will eventually come to a point where you've paid everything off, making you the sole owner.

This now makes that money available to save up or spend on whatever your heart desires.

It's worth keeping in mind that the value of the vehicle you purchase can depreciate almost 30% in value after the first year of owning it. This becomes especially important if you plan on reselling your car at some point.

Before making your decision of whether you'll be driving away with a bought or leased car, take a look at the following flow chart below for a quick list of highlights of both buying and leasing a car. Also, make sure to ask yourself those important questions to help you decide what will work out best for you in the long run. We are always available at the Zanchin Automotive Group to answer any questions you may have.

After making important decisions like this, you're free to start focusing on the fun stuff and asking yourself equally important questions, such as: "When can I drive away in my shiny new vehicle?"

Buying or leasing - which one works the best for you?